OREANDA-NEWS. Moscow authorities and MIRAX GROUP agreed to expand the floor space of the major uncompleted object of the capital - the multi-functional Vertical complex. The object of 165 thousand square meters instead of initial 118 thousand will be commissioned in late 2008. The construction investment contract was finalized in the end of May, and on June 18 MIRAX GROUP began erection on the site.

Moscow authorities and MIRAX GROUP agreed on a new concept of the Vertical complex, which envisages floor space increase from 118 to 165 thousand square meters. The Moscow government adopted a corresponding Resolution #228-PP on April 3, 2007. The document envisages that the residential part of the complex will comprise 66,410 square meters instead of 53,000 square meters, while the underground parking will expand from 400 to 650 cars. Another 22,963 square meters will be commercial floor space.

The construction investment contract was finalized in late May. On June 18 MIRAX GROUP began concrete works at the object. 

“We agreed to complete the construction of the object to assist the city in resolving a complicated problem with deceived construction co-investors,” MIRAX GROUP Board member Maxim Temnikov said commenting the situation. “However after we analyzed the initial concept it became clear that the profitability of the object was negative. Therefore, city authorities accepted our proposal to expand the residential part of the object, which will allow erecting it without losses.”

We remind that the construction of Vertical (at 111/2, Leninsky Prospect, Southwestern administrative district) was launched by Conti Corporation in 2002. In 2003 the rights of the customer and investor went to ZAO Developers Partnership, which engaged the Spetsvysotstroi Company as the general co-investor. Soon after that head of the Moscow construction complex Vladimir Resin said city authorities were dissatisfied with the progress of the project. In January 2006 Moscow authorities terminated the investment contract with Developers Partnership, and last September the object was offered at an auction for $21.6 million. However, there were no bids, as the object was unprofitable because previous investor ZAO Developers Partnership had already sold three quarters of the residential space of Vertical. “To complete the object and return to the city and owners some 40 thousand out of 53 thousand square meters of housing floor and at the same time sustain zero profitability losses was an unreal task,” Maxim Temnikov commented. “Even today after an increase of the residential part has been agreed we shall earn no profit as the market cost of a square meter is $6-7 thousand. Therefore, we are working on the sales concept for non-residential floor space.”

Temnikov estimated total investments into Vertical construction completion at $200 million. The construction of the four-section complex with varying number of floors (33-46 floors) is scheduled to be completed in late 2008. It will have all the necessary infrastructure - a gym, cafй, restaurant, household services, etc.